Bloomberg reported that South Korea’s Dongkuk Steel Mill Co won the bid for Ssangyong Engineering & Construction Co and will purchase a stake worth about USD 282 million to enter the construction business.

A group led by Dongkuk Steel was chosen as the preferred bidder for a 50.07% stake in Ssangyong Engineering, beating Namyang Construction Co which buys and sells distressed assets. An agreement is expected to be signed in about a month after further talks.

Dongkuk Steel which gets almost half its annual revenue from making construction steel wants to diversify its business through the acquisition to reduce its dependency on steel. The stake is worth KRW 283.2 billion. Dongkuk Steel offered to pay KRW 31,000 for each share of Sssangyong Engineering, valuing the stake at KRW 462 billion.

Mr Moon Jeong an analyst at Daishin Securities Co in Seoul said that “The acquisition will help Dongkuk Steel move into construction as well as expand overseas. Dongkuk Steel is looking to build steel mills abroad and having a construction unit will help that plan.''

Dongkuk Steel aims to boost annual sales of Ssanyong Engineering to 6 trillion won by 2020, taking it to the fifth position from the 13th in South Korea.

Samjong KPMG Advisory Inc and Socius Co are arranging the sale